Thursday's (Oct. 19) announcement that the first chips will roll out from the SemIndia plant next June, three months later than expected, again fueled concerns here that the government is not taking seriously chip makers' concerns. The delayed rollout is expected to cost SemIndia more money than it had anticipated, according to industry sources.

Concerns are growing that the SemIndia plant may become unviable and the delayed chip policy will force plants operators to invest $6 billion in its next process technology node, twice what operators' originally anticipated.

"The cost of a fab is about $3 billion and the SemIndia project was announced nearly a year ago. Fab costs typically double every three years," said Rajendra Khare, chairman of the India Semiconductor Association. "There is a strong window of opportunity for semiconductor manufacturing for India, but frustration is overflowing among investors because the wait for announcing a national policy on semiconductor manufacturing is becoming endless."

Khare declined comment on the reasons for the delay, but sources said disputes between India's information technology and finance ministries is the reason for the delay.

"Initial investors need to be incentivized so that the barrier of semiconductor manufacturing is overcome in" India, Khare said. "Some countries have given incentives of close to a billion dollars for setting up fabs. All we ask is that the federal government put in a little over $2 billion together for all those announcing fabs in India."

India's chip industry has lagged behind the rest of the world due to its dependence on government backing, bureaucratic wrangling and turf battles. The current impasse could last until the end of the year, when observers said the chip policy may finally be unveiled.